ed Simons
>> Tonight an hour long show: "Horizon Vote 2008 Special -- The Propositions." In this special, we’ll tell you the basics of each Proposition and then get into detail and debate as you hear directly from both sides. Improve you Proposition I.Q. Next on Horizon."

Announcer
>> "Horizon" is made possible by contributions from the friends of eight, members of your Arizona PBS station. Thank you.

Ted Simons
>> Good evening, and thanks for joining us on "Horizon." I’m Ted Simons. Over the next hour, you will learn about the eight statewide Propositions on the ballot in Arizona this November. We will present them in numerical order, starting with Proposition 100. It's called "Protect Our Homes," and it would amend the constitution to ban new taxes on the sale or transfer of real estate in Arizona. Right now there is no such tax in our state. Those for the ban say it would prevent double taxation and would help the economy by preventing taxes on the sale of a home. Those against the measure say it ties the hands of government officials by keeping a potential revenue off limits. Next we move on to Proposition 101. It's a constitutional amendment called the "Freedom of Choice in Health Care Act." Supporters say it will preserve our freedom to choose health care coverage. Opponents say it will stop universal health care. In a moment, we hear from both sides of the issue. First, here's a look at the language of the Proposition.

Merry Lucero
>> The Freedom of Choice in Health Care Act, Proposition 101, would amend the Arizona constitution to provide that no law shall, one, restrict a person's freedom to choose a private health care plan or system of their choice. Two, interfere with a person or entity's right to pay directly for lawful medical services. Three, impose a penalty or fine of any type for choosing to obtain or decline health care coverage. And, four, impose a penalty or fine of any type for participation in any particular health care system or plan.

Ted Simons
>> Here to talk about Proposition 101 is Dr. Eric Novak, the chairman, and opposing the measure, Dr. Mary Rimsza with the American Academy of Pediatrics. Why is this initiative necessary?

Eric Novak
>> It is crucially important. We know health care reform is coming, it's desperately needed. All you have to do is look to your previous guests, what has gone on in the energy crisis recently. When legislation gets written, the biggest special interests sit down at the table behind closed doors with legislators and bureaucrats and leave us, patients and families out of the discussion. All the Proposition does is protect the rights of patients to be in control of their health care decisions.

Ted Simons
>> What is wrong with that?

Mary Rimsza
>> It sounds like motherhood and apple pie, doesn't it? The problem, it is a very vague initiative. Once it is done, it cannot be changed. None of the terms are defined. What does a private health care system mean? What does health care mean? It is not defined in the -- health law experts say this would cause us to totally revamp our whole -- the fact that we do it the way we do it, the managed care approach, model, cuts the cost dramatically. Estimates are that the costs of the plan, would increase by over a billion a year if we had to go to the fee for service model which is what is proposed here.

Ted Simons
>> Have you looked past the initial fallout or initial consequences of -- past to what Mary is talking about?

Eric Novak
>> Absolutely. This is a trumped up charge. We addressed all of the organizations who might have concerns with this over a year ago. Some neutral, some supported us, but the point is that all of the interested parties had the opportunity to look at this. This is the spreading of fear. For example, who is looking to oppose us? An out-of-state insurance company, which in the past had more complaints per patient than any other California H.M.O., just put $50,000 in to oppose this. Scan Health Care has one client in Arizona, that is the government, Maricopa County, providing access care. Big government and the special interest, they rub each other's back, and now is looking to protect each other. This does nothing to access.

Ted Simons
>> But the idea, costs increase, higher premiums, folks will wind up not being insured, and a system overloaded. Why does that not make sense?

Eric Novak
>> Well, because our initiative makes no impact on the costs at all. This is a trumped up charge. People out of the governor's office had decided that they wanted to -- it turns out, if you want to oppose something, just say it is going to wreak havoc on the financial system of the state, it will eliminate choice, break the budget. That's exactly what happened in 2006 when the people who opposed property rights said it was going to cost the state $4 billion. It passed, 65% of the vote, and two years later the cost to the taxpayer zero. This does nothing to increase costs.

Ted Simons
>> Your concern described as trumped up.

Mary Rimsza
>> Well, we disagree. Health care experts have said this is a very serious issue. Because they have not defined any of the terms, it will be up to the courts to decide whether it applies to the access program or not. We think it will apply. I think we all agree we want to decrease the number of uninsured, provide health care at the lowest possible costs, and maintain as many options. If we make up a -- pass initiative that changes our constitution, that is irrevocable. We can't go back and argue the different pros and cons after that is done. That will trump every single statute we have, whether it relates to access, workmen's comp, and other programs.

Ted Simons
>> Some type of competition involved --

Mary Rimsza
>> It is not competition at the core. Managed care plans right now compete. What is at the core whether or not you can make for less expensive health care insurance by limiting what can be covered. Do we want it to be possible for somebody to get their hair transplant when they're on access? Maybe we don't want to do that. Maybe we want limits on something.

Eric Novak
>> That is the most absurd thing. There is nothing in the initiative that requires the government, or an access plan or any private insurer to cover anything. All this says is very simple. I urge everybody to read the initiative, watch the show again, go to yeson101.com, read the initiative and the words. I can only imagine what Mary and the people would have said if they were around for the bill of rights. Freedom of speech is way too vague.

Ted Simons
>> We won't go back quite that far. You talked about motivation as far as the other side is concerned. Some suggesting your motivation is to stop universal health care before it even gets past the first committee. Your response.

Eric Novak
>> Absolutely not true. Look, our supporters of Proposition 101 are a very diverse group. There are people all across the political spectrum, Republicans, Democrats, conservative, liberal. We all have different feelings about health care reform. We all agree on this one thing. No matter what health care reform comes down, it is incredibly important that our fundamental rights to be in control of our health are maintained. There are lots of smart people across the political spectrum for health care policy. Which part of the initiative is unpleasant? That the government ought not be able to penalize you if you do not want it.

Ted Simons
>> Next we move on to Proposition 102, the so-called marriage amendment. Proposition 102 would amend the Arizona constitution by defining marriage as a union between one man and one woman. It was the only referendum referred to the ballot by the legislature last session. Proposition 102 was born on the last day of the legislative session amidst controversy. Proponents had been trying to get some form of the measure passed all year. Larry Lemmons tells us how it survived to be considered on Election Day.

Krysten Sinema
>> The bill is actually -- was actually introduced in early February, and it came to the floor of the House for the first time in April. We successfully amended it in April to include a provision that enacted a domestic partner registry and domestic partner recognition for unmarried couples in the state and we had a majority of members who supported that. Leadership doesn't like that, so they killed the bill and started over. The bill was brought back in the house judiciary committee, we were able to -- they had to do it again in the house judiciary committee. Then it went to a vote in the senate, and on the first vote in the senate, it failed, which is about a week and a half before the session ended. They brought it back at the very eve of session -- a motion for reconsideration, which is a motion that you use when a bill has failed and you ask to vote on it again to get another bite at the apple.

Larry Lemmons
>> That set the stage for what would be a controversial -- Senator from Phoenix and the senator from Tucson were engaged in a discussion on the floor of the committee as a whole. Senator Jack Harper of Surprise was acting as chairman. The two senators were talking about House Bill 2723, concerning special districts and taxation. But Republicans suspected the two were actually filibustering, preventing the marriage proposal from going to the floor.
Jack Harper
>> One second, if you would like to speak, Push the buttons again. Okay, go ahead. You have the floor.

Senator
>> Mr. Chairman, I move that the bill -- that this bill and the rest of the bills be retained on the --

Jack Harper
>> Any discussion? All of those in favor say aye? Opposed -- the ayes appear to have it. So ordered.

Senator
>> Order.

Senator
>> Point of order.

Larry Lemmons
>> Senator Harper --

Senator
>> I move the committee to rise and report.

Jack Harper
>> Any discussion? All of those in favor, say aye. Any opposed say --

Senator
>> Point of order.

Warde Nichols
>> You know, it was really significant for this referendum to come out of the legislature. It had been battled since January when we went in the session. We knew what we wanted to do, what we needed to get done. As the session waned on -- a lot had to be put on the back burner, and once that was done, it went back to the forefront. The battle lines were drawn. As you are well aware, a couple of members in the senate who were opposed to the amendment began to filibuster, we knew that was going to happen, and we anticipated some things. The way it played out was a surprise to everybody, getting it to have a vote on the senate floor. We knew we had the members needed to pass this.

Larry Lemmons
>> Later charge that Harper violated the senate ethics rule, an investigation followed, but Harper was cleared by the committee by a vote along party lines. The marriage referendum, the only one to come out of the session and end up on the November ballot.

Krysten Sinema
>> This is something that the voters are going to see. Why am I voting on this again? They voted on it in 2006, made their voice known. I think Arizona voters are concerned about the pressing problems in our state, the economy, mortgage prices, gas prices. They're concerned about health care, education. What they're not concerned about doing is voting on something that they voted on two years ago.

Warde Nichols
>> To put it into the constitution is absolutely critical. We have a defensive marriage act here in Arizona that was passed sometime ago, the opposition says we have laws on the books defining marriage. We do have laws on the books, but due to actions of California, Massachusetts, where you have activist judges going in and changing laws on the book, that is why it is critical for the people to decide this issue. Take it out of the hands of politicians, out of the hands of judges, and let it go to people and say do the people of Arizona want these 20 simple words, only the union of one man, one woman shall be validly recognized in marriage in the state of Arizona.

Austin Nimocks
>> We are here to provide clarity to Arizona law. What we don't have is anything in the Arizona constitution stating what marriage is or is not in this state. Proposition 102 provides Arizona an opportunity to go vote and determine whether these 20 clear and simple words, one of the simplest amendments you can add to the constitution, define marriage in this state. It is really that clear and that simple? And millions of Arizonans enter into the -- into matrimony every year, why wouldn't we want to define that and make it clear what marriage is in this state?

Ted Simons
>> The question is why would we want to define it if everyone has the idea, if the law is already on the books, why this next step?

Austin Nimocks
>>There is a difference between a statute and a constitution. We have a constitution, that is the law that belongs to the people. This amendment would be voted on by the people. It doesn't belong to the legislature. Do they determine that marriage in this state is one man and one woman as it always has been or not, it is that simple?

Ted Simons
>> Securing the definition of marriage, why is that a bad idea?

Krysten Sinema
>> The definition is already secure as Mr. Nichols mentioned in the video. Indeed, in 2003, the Arizona courts were asked whether or not this law was constitutional, and they decided that that law was constitutional. There is no threat to this definition. The truth is that we see politicians here saying that they don't believe that the voters knew what they were doing in 2006. They think they're dumb. They're asking them to vote again. I think Arizonans want politicians to keep their nose out of marriage and focus on the real questions in the state.

Ted Simons
>> The idea that a court could come in, and it hasn't happened yet, but the fact that it could happen, does that not necessitate taking the next step?
Krysten Sinema
>> In 2003, the Arizona appellate court ruled on this statute and decided it was constitutional. In 2004, the Arizona Supreme Court denied review, which in laymen's terms meant it upheld the decision of the lower courts. Our courts have decided this issue.

Ted Simons
>> We now move on to Proposition 105, Majority Rule. This one would require a majority of all those registered to vote, not just a majority of those who vote, for any measure that increases taxes or involves additional government spending. I talked about Prop 105 with Steve Voeller, president of the Arizona Free Enterprise Club and a supporter of the Proposition, and John Wright, chair of the voters of Arizona no on prop 105.

Ted Simons
>> Steve, why do we need to change the constitution for this?

Steve Voeller
>> Because right now, we have a budget crisis. We have a $1.7 billion budget deficit. Only two things can happen to get out of this mess. One is to raise taxes. The other option is to cut spending. The easier choice is to raise taxes. This initiative would make it -- would make it more difficult for private interest groups to put a ballot initiative on the ballot to raise taxes.

Ted Simons
>> Why is it wrong to make it more difficult, especially in troubled times to get an initiative that raises taxes?

John Wright
>> This doesn't belong in the constitution. It is not about taxes, not about the budget, it is about your vote. This initiative would count anybody who does not vote automatically as a no vote making it virtually impossible for the citizens to pass any initiative. Leave the referendum process in the legislature's hands to put something on the ballot. For citizens to have to get a majority of everybody registered to vote, even if they don't live in Arizona, it would be impossible. It is not about money. It is about your vote.

Ted Simons
>> Why include the votes of voters who don't vote?

Steve Voeller
>> This is another simple majority requirement that nine other states have something similar, different types of ways of doing it. It raises the threshold to make it more difficult to raise taxes. If you don't want to be more difficult, you might not like this. It will make it more difficult to raise taxes and spending. We think that fits nicely with the constitution which already has a two-thirds supermajority requirement -- that worked nicely since it passes in 1992.

John Wright
>> It raises the threshold to impossible for citizens to pass an initiative. It is not just about taxes, any additional government spending, oversight, implementation, regulation. This makes it impossible for any of us as citizens to put something on the ballot and pass it.

Ted Simons
>> Yet there is that two-thirds supermajority in the legislature. If it is more difficult there, why not make it more difficult in another way that things can become law?

John Wright
>> We have it in the legislature. Many don't think it is a good idea. We don't need to make a bad idea in the legislature a bad idea for citizens. It is not easy to win an initiative campaign in Arizona. Win or lose, based on the votes of the people cast. If there is something on the ballot and we disagree and vote different ways, that is democracy. If there is something on the ballot and Steve thinks it is important and votes yes for it, and I don't show up, you shouldn't count my vote against his.

Steve Voeller
>> Why is it okay for 20, 25, 30% of the voters to pass a major tax increase on a spending program which requires a tax increase on the entire population?

John Wright
>> It is not about taxes, it is about votes. It is our job to get out the vote. If not enough people are going to the polls, let's expand democracy, not limit it.

Steve Voeller
>> There is nothing wrong with making that threshold be a little higher especially in times like this where the economy is already in a very slow growth pattern.

Ted Simons
>> The idea of making it more difficult to bypass the legislature. Arizona tradition has the initiative process, the idea, especially when it comes to things that will be difficult to fund for the state, why is that a bad idea?

John Wright
>> First of all, we already have it on the books, any initiative that requires funding, needs to identify the funding source before it is put on the ballot. We have that in place. It is an Arizona tradition, it is in the Arizona constitution. The founders of this state put an effort in front of the citizens to go to the ballot to direct people's vote if they were not satisfied with what the legislature was doing --

Steve Voeller
>> That's not totally true. It doesn't take away the rights of having an initiative. It raises a threshold on ones that compel more spending and taxes on all taxpayers.

Ted Simons
>> It has been mentioned here, and I know there is concern elsewhere, that almost every initiative has some state spending involved. Is it written clearly enough to where this is something that applies? This is something that doesn't?

Steve Voeller
>> We think it is clear, the joint legislative budget committee nonpartisan group at the legislature argues it would only apply to four or five initiatives since 1998, and 34 it wouldn't have applied to. Some people read it to be more broad than that. I think it applies to tax increases, spending increases, or initiative that compels a private person or entity to spend more, such as the minimum wage increase.

John Wright
>> What Steve thinks should not change our constitution. It is unclear. Many people, scholars, lawyers, others, any additional spending -- it might apply to city and county efforts when citizens want to put something on a local ballot. With this much uncertainty, with the constitution at stake, our right to vote and have our vote counted, this is too risky and it is wrong.

Ted Simons
>> Perhaps extraordinary measures need to be taken -- we talk about the budget a lot on this program, half of the time they are throwing up their hands and saying there is nothing we can do because so many initiatives have passed and we want to make sure they are funded.

John Wright
>> We don't go around our elected leaders to go around the constitution to make policy more difficult. That is un-American.

Steve Voeller
>> We do it all of the time. The legislature is supposed to appropriate the entire state budget. They appropriate about a third of it. Most is voter protected or just a formula automatic increase. This fits nicely with the Arizona constitution.

Ted Simons
>> I keep going back to the idea that I go off and vote, I make the effort, I go through the process, and my neighbor is sitting on the couch watching Judge Judy or something, and his vote -- he essentially is voting no by not moving, or I might be voting yes or no by moving and we're all treated the same. Explain why that is good.

Steve Voeller
>> It's good, because this will require -- again, this only applies to private groups who are seeking to go around the legislature. It requires them to sell their product better. Get people off the couch to vote. Do it in a high turnout election -- this cycle projected turnout is 75, 80% in Arizona, would require about a 64% approval to pass a tax increase. That is the same, generally the same threshold as the tax increase at the legislature.

John Wright
>> It is not about private interest groups, Arizona citizens to be able to put something on the ballot the way our elected legislators do now. It would count as a no vote someone who was recently deceased but name is still on the voting polls.

Ted Simons
>> Spending limits -- legislature can't touch them, by law they have to do what they're supposed to do, why not raise that bar?

John Wright
>> The bar is still fairly high. That's what the constitution has, democracy, your vote counting.

Steve Voeller
>> $1.7 billion deficit, the ones with the -- their hands are tied on a large share of that budget, that solution.

Ted Simons
>>> Our next measure deals with the payday loan industry. In 2000, payday loan companies started popping up in Arizona after a law was passed authorizing them to operate differently than other lenders. We take a closer look at Prop 200, also called the payday loan reform act. A debate on the merits of the Proposition after David Majure shows us how payday loans work in our state.

PayDay Lender
>> How can I help you today?

David Majure
>> They're almost everywhere you turn. Payday lenders and their promise of cash now.

PayDay
>> Based on net income, we can loan you anywhere from $50 to 500.

David Majure
>> Meant for working people with a steady source of income. The customer writes a check for the amount of the loan plus fees. The company holds on to the check until the customer's pay day.

Tamara Sisk
>> It's great to think I can run in and get that and just kind of get me through to my next paycheck.

David Majure
>> She took out her first payday loan in 2004 when her husband at the time was out of work and they were out of money.

Tamara Sisk
>> It was $100, $15 on it, relatively I was like I can do that.

David Majure
>> Living paycheck to paycheck with credit cards at their limit, she took out more payday loans.

Tamara Sisk
>> For about a year off and on I would pay off, and then I would come back, and then things just started getting tougher, bills started really piling up.

David Majure
>> Pretty soon one loan wasn't enough.

Enrico Torres
>> Whenever a consumer walks in to take out a loan, they are notified through a written agreement or orally that they cannot have more than one outstanding loan out with a payday lender.

David Majure
>> It is against the law. When she tried for a second loan, she wasn't sure what would happen.

Tamara Sisk
>> Nothing happened. Here is your money. I was like, oh, okay. So there's two loans I have out now that we're juggling with fees and different times, and it just snowballed.

David Majure
>> Before long she had nine loans, totalling about $3,000 with different payday lenders.

PayDay Lender
>> We lend at 17.5%, which is basically $17.50 for every $100 you borrow.

David Majure
>> Expressed as an annual percentage rate, that comes out to 455%. For banks and other lenders, the A.P.R. is capped at 36%. But Torres says it is unfair to annualize what amounts to a one-time fee.

Enrico Torres
>> Short-term loans meant to meet short-term financial obligations. When you look at return check fees, late fees, when you look at fees to take money out of an A.T.M., there is not an annual percentage rate on that.

Tamara Sisk
>> Cash, 588.23, check mate $575.

David Majure
>> Payday loans had essentially turned into revolving credit. By paying another fee, she could extend each loan a total of three times. When a loan was due in full, she would pay it off in cash and take out a new loan to cover other fees.

Tamara Sisk
>> Other bills were not getting paid because all of the money was going to pay these fees. And I started looking through the contracts then. And I saw that it was 391% A.P.R., oh, my gosh. I thought I was crazy when I paid 13% on a vehicle. Not 391%.

David Majure
>> She blames herself for the financial mess she was in. But the payday loan companies made it way too easy.

Tamara Sisk
>> Until May of '05 when I filed bankruptcy.

Enrico Torres
>> At some point people have to take financial responsibility for the decisions that they make.

David Majure
>> Used properly, Torres says payday loans help people out of short-term emergencies.

Enrico Torres
>> They are a cheaper alternative than paying return check fees with banks and other fees that both credit cards and the banks charge such as late fees, overdraft fees, negative balance fees.

David Majure
>> The state law that authorizes payday loans is set to expire in 2010. Proposition 200 sponsored by the payday loan industry removes that expiration date. These are some of the changes it makes to current law. It limits fees to 15% of the principle amount borrowed. Prohibits loan extensions and rollovers. Allows a customer to request a repayment plan giving them four paydays to pay off the loan at no additional charge.

Enrico Torres
>> The reform act is real, it is measurable, and it is pro consumer.

Tamara Sisk
>> I’m voting, but we're voting no. Payday loan industry needs to be held to the 36% interest cap just like any other lender here in Arizona.

Ted Simons
>> Joining me to talk about Proposition 200 is former state lawmaker and political consultant Stan Barns, representing Arizona for Financial Reform, Yes on 200 campaign. And Jean Fox, Director of Financial Services for the Consumer Federation of America, Arizona for Responsible Lending, No on 200 campaign. Thanks for joining us.

Stan Barns
>> Good to be here.

Ted Simons
>> Why is this law necessary?

Stan Barnes
>> I get to go first. It is necessary because some large number of Arizonans want to vote yes on a reform package for the payday loan industry. If nothing happens, the industry will be eliminated and this option will evaporate in the marketplace, and those consumers, thousands every day, will no longer have this option, be left to bounce checks and do other things that are more costly. It is -- in my 20 years of civic involvement in Arizona, I have never seen an issue so upside down in the ratio of politics to facts. I mean, all issues have that flavor because people spin. But this is just craziness, the way this industry is attacked by people that don't really understand it or don't recognize that there is a real need and reforming the industry is better than eliminating the industry.

Jean Ann Fox
>> Why are you against? We're against Proposition 200 because it really does not reform the payday loan product. The reforms included in the seven page bill that the industry has written did not curtail the debt trap that payday lending is for most consumers. 60% of the loans go to people who have multiple loans. One in four of them go to people who have more than 21 loans in a year. So, this is not a one-time debt for consumers. People end up paying for these loans over and over because they're so expensive, they're due on the next payday, and the lender is holding your personal check that will bounce if you don't come in and renew the loan or pay it off and take out another one.

Ted Simons
>> Does the law address folks taking loan after loan to pay for loan after loan?

Stan Barnes
>> It does. In fact, the initiative, as drafted and on the ballot, answers every assertion made by opponents of the payday lending industry, with the exception they still don't like the rate, which is going to go lower to $15 per $100. That clear and simple rate which is understandable by the payday loan customer, cheaper than the $54 you might pay to bounce the check or the rehook fee for the utility, overdraft credit card, that rate -- A.P.R. terms in order to scare or mislead voters. They tried to put it on the description that went on the official document they read. They sued to put that in there because they thought that would scare people. The secretary of state did not agree. The attorney general of Arizona did not agree. They sued in court and the court did not agree with the 391% number saying the description written by the secretary of state and attorney general was complete as it was. It is a difficult issue to deal with when opponents want to spread fear instead of facts.

Jean Ann Fox
>> That is a lot of points to answer. This ballot initiative would authorize 24, two-week loans per year per customer. You wait 24 hours and you come back and get another loan. Most loans are taken out in the same period. They end up having to come back before they get paid again because they run out of money. These loans must be quoted with the annual percentage rate. That is required by the Truth and Lending act. That has been the law of the land for 40 years. The federal reserve said that payday loans were subject to truth in lending, and the costs have to be stated as the annual percentage rate or the dollar finance charge. Stan likes to talk about $15 per $100, but it is really 391% for the typical two-week loan.

Ted Simons
>> Let's bring it back a little to where folks who may not be familiar with the payday loan industry. I need $100, I go to the payday loan store. How does it work and what happens if I’m not able to repay the loan within the required time? How long do I have?

Stan Barnes
>> In common law, typical two weeks. $100, in order to walk out of the store with $100, under current law you would write a check for $117.65. You would walk out with five 20 bills and do your business. When payday comes up, that check is deposited or you can buy it from the store. You're square on the loan. Under today's law, if you can't make payment on that payday, you can roll it over and pay another fee. Extend the loan to your next payday, pay another fee to do that, and you can do that three more times. People can end up paying a number of fees on the same money held out too long. That's current law. The initiative makes that illegal, stops it, and makes you leave the store before you can come back and get a loan the next business day. There is only so much you can do in the way of big government telling people how to spend their own money.

Ted Simons
>> What happens if I can't pay that in two weeks?

Stan Barnes
>> Under current law, there is -- it is not addressed. You either default and you never get a loan again and your credit is hurt. Who knows what? Maybe you go out and do something else. Under the initiative, a mandated repayment plan that allows the customer to take whatever they owe, break it into four equal pieces and spread it out over the next four paychecks. That might be one month at a time for no cost to that customer. That reform, itself, is a valuable reform for people who cannot meet their obligations
Ted Simons
>> Some reform better than no reform?

Jean Ann Fox
>> These reforms don't actually work. They have been tried in other states, and they have found that only one to three percent of the eligible loans went to the repayment plan as prop 200 is written, there is no requirement to alert consumers that the repayment plan is available. You can only negotiate a repayment plan once a year. You have to know to come in and ask for it ahead of time and get it rewritten before close of business on the day your loan is due. And so it is not surprising that even in states that have tried requiring a repayment plan, very few loans are paid that way. Very few consumers are able to use it. Most consumers keep right on paying to renew the loan or pay off one loan and then taking out a new loan before they get paid again. This does not break that debt cycle.

Ted Simons
>>> Our next initiative is Proposition 201, the "Homeowners Bill of Rights" initiative. We'll have a debate on the issue, but, first, here are details of the initiative.

Ted Simons
>> It would create a ten year warranty on the homes, demand -- homeowner the right to participate in getting the contractor to do repairs. If an agreement is not reached, the homeowners can sue the builder. Homeowners can recover legal costs but a builder cannot, homeowners can sometimes recover compensatory damages. Relationship between a -- right to cancel a contract within 100 days, get most of the deposit back. Seller's agent would be prohibited from participating in false mortgage applications. Here to speak in favor of Proposition 201 is Rebekah Friend of the A.F.L.-C.I.O., and speaking against the measure is Kevin O'Malley of the law firm Gallagher and Kennedy. Thank you for joining us on "Horizon."

Rebekah Friend
>> Thank you.

Ted Simons
>> Why do we need this law?

Rebekah Friend
>> We started hearing concerns from two groups, workers building these homes and homeowners. The concerns were not being addressed by the builders. We believed that this is legislation that is needed. The legislature took out a lot of homeowner protections in 2002, we believe that we took this to the voters see if they will put some of the protections back in.

Ted Simons
>> Protecting the homeowner, sounds like a good idea.

Kevin O’Malley
>> Of course it is. The choice is more lawsuits prompted buy out of state unions providing most of the funding for this Proposition, and a Proposition that was written by an out of state lawyer who did not -- about five or six years ago there were meetings among the interested stakeholders in this process. Homeowner groups, contractors, insurance companies. We all sat down and worked through this and came up with a process that works. It gets homes fixed. It gets them fixed quickly and without lawsuits. And now we have someone coming from out of state telling us we're more in favor of lawsuits and not in favor of getting the homes fixed when they need it.

Ted Simons
>> Talk about lawsuits necessarily and otherwise, does this just mean a whole bunch more?

Rebekah Friend
>> Well, it certainly -- this law does not bypass the arbitration section, the A.D.R. you can't do that. Federal law prohibits that. We're talking about a family's largest investment. Median income in Arizona 2007, $45, $47,000. New home median cost $283,000. You're talking about a family's largest investment. If you buy a new car for $30,000, you can get an eight to ten year warranty. We're saying you should be able to do this on a new home. We are not inventing the wheel on this. Two states, New Jersey, Louisiana, do have a ten year warranty on new homes.

Ted Simons
>> Talked about what happened five, six years ago, and the resulting law. Do you want to take it to what happened prior to the law? Does this jump that law and make for new things?

Rebekah Friend
>> I think this makes for new law, and speak to Kevin's concern that this is an out of state union who funded it. The union who funded the signature gathering is in state, sheet metal workers. You have to make the language fit with existing law and not violate state or federal law.

Ted Simons
>> Homeowners right now have enough protection, is there room for more, or are you saying it is good enough as it is?

Kevin O’Malley
>> The system we have now works very, very well. Consensus group. Legislature held open and public hearings about this. Bipartisan support. Governor signed the bills into law because it provides an equal and balance system. Rebecca said we are not taking away the right for arbitration. If you read the bill, that is what it does. This strikes that language from the existing law and forces people into litigation. It takes away people's rights. It takes away the rights of the homeowners and the builders to get together and solve their problems themselves.

Ted Simons
>> Talk about that. Does this keep folks -- I mean, do you have to go to court now?

Rebekah Friend
>> No, absolutely not. In fact, you do have a choice of contractors. You have to have someone -- three that have a claim record with the registrar contractors. The home builder can be one of those. Homeowners need a way to address situations when they're not fixed. We did a study on homes, surveyed 400 homeowners. Out of those, 59% of those homeowners had defects that had not been addressed --

Ted Simons
>> A ten year warranty addressed here as well, why is that not such a great idea?

Kevin O’Malley
>> Under existing law, homeowners have an eight year warranty, and if a problem is developed in the eighth year, you have a nine year warranty. That is not what it is about. It is not about warranties. Our builders stand behind their product already. Do you want the -- do you want the current system which avoids litigation and has people sit down in a dialogue, and provide a reasonableness to the problems. Under this Proposition, the homeowner no longer has to tell you where the defects are in the home. How are you going to get things fixed if they don't tell you where the problems are in the home?

Rebekah Friend
>> Homeowners are saying what the defects are. J.D. powers did a study that said with every new home is 11.5 problems.

Ted Simons
>>> Talk about legal fees. Why shouldn't home buyers, the consumer, in order to stave off some of those frivolous lawsuits or unnecessary lawsuits, why should they be in some way, shape, or form responsible for the legal costs?

Rebekah Friend
>> I think what we're assuming is there is going to be a lot of frivolous lawsuits. We ran the minimum wage commission, the courts would be buried in lawsuits -- some of the same folks opposing this initiative opposed that initiative based on those fallacies. That is a fallacy. Nothing proves we will have increased courts, legal fees, increased anything, except that homeowners will get the defects fit.

Kevin O’Malley
>> Existing law, if you go through the process, and determine that you don't like the offer made by the builder and you go to a lawsuit, at the end of that lawsuit, if you do better than the offer that was made to you before the lawsuit started, you win, you get attorney's fees, expert witness fees. If on the other hand, out of state lawyers come in, file lawsuits that are frivolous, have no merit and you go to litigation. At the end of the day, Mr. Builder, you did a good job. Under this Proposition, they're striking that out and saying no matter how unfrivolous the builder never gets his fees. It will incentivize out of state lawyers to file those --

Ted Simons
>>> Let's move on now to Proposition 202, which would make changes to Arizona's employer sanctions law. We'll hear from people on both sides of the issue, but, first, here's more on Proposition 202.

Mike Sauceda
>> Proposition 202 is a business-backed initiative that would make changes to current law for those knowingly intentionally hiring illegal immigrants. There are two levels -- those -- they must also sign an affidavit saying that all illegal employees have been fired. That is the same as current law. For the first violation of intentionally hiring an illegal alien, suspension of business licenses at the business location where the violation occurred until an affidavit is signed that all illegal employees have been fired. The business will be placed on five year probation. The court will be required to suspend the business license of a violator for ten days for an intentional violation -- second violation, a company's business license would be permanently revoked at the location where the violation occurred the same as current law. Prop 202 would give employers a defense if they use e-verify -- setting a higher bar than current law to prove an illegal act on the part of the employer. Current law does not give -- prop 202 would expand the crime of identity theft -- unlike the more general identity theft provisions in current law. Prop 202 has provisions to go against employers of four or more workers who pay in cash and fail to pay taxes, unemployment, workers compensation benefits or report the hiring of that person in the state. Employers in violation -- prop 202 prohibits anonymous complaints against employers. Current law allows anonymous complaints.

Ted Simons
>> Earlier I spoke -- here is the interview.

Ted Simons
>> Jessica, we have an employer sanctions law, why this?

Jessica Pacheco
>> The current law that is on the books, we do have one. Immigration has become a national issue. The topic of much public debate, and illegal immigration and its negative ramifications have been a very big part of that debate. In Arizona, people have spoken, told us that they want to make sure that employers that are unscrupulous are not getting away with exploiting a certain part of the population -- the current law we have is flawed. It is going to fix those loop holes and give us an employer sanctions law that is tough, that is fair, and that is enforceable.

Ted Simons
>> Mending a law that has loopholes sounds good. What is wrong with the idea?

Don Goldwater
>> Sounds good until you understand the fact that this initiative is brought fourth by the Wake Up Arizona people who are trying to do away with employer sanctions. They are hired -- Jessica's firm to unseat Russell Pearce, the author of this bill. They did their best to assassinate his character all of the way on this. Do you really think this group would go out and put out an employer's sanctions bill. This is a fraud based on the people of Arizona, it takes away the e-verification system, which is important for business --

Jessica Pacheco
>> Hang on. I need to break in. It does not take away e-verify. It gives employers a choice.

Don Goldwater
>> No.

Don Goldwater
>> Businesses who use e-verify, have the option, ability to use an independent third party sanctioned by the federal government to do the due diligence to determine whether or not the person they are hiring is here legally or not.

Jessica Pacheco
>> I think he is confusing the issue a little bit. We need an employers sanction law that is tough and fair. It puts forth a law that allows businesses to use e-verify --

Don Goldwater
>> The I-9 process as you stated so many times in circuit, ninth court circuit of appeals is broken. When you look at the act --

Don Goldwater
>> Three documents you can use to verify employment. The I-9, social security, driver's license. They further say on the thing that you cannot use a document that is not secure. The three most forged documents out there, I-9, social security, driver's license. Businesses are left wide open, they do not have a leg to stand on should prosecutors come in, raid their business and prosecute them. The price on the federal side is $2,000 or higher and up to ten years in jail.

Ted Simons
>> The core of what we're talking about here, the idea of federal penalties, punishment, those things are enough, or what the state wants to do regarding licenses is enough. You're saying the federal should be enough. Don't go too much farther past that?

Jessica Pacheco
>> No, what I’m saying is we need to give businesses a choice in hiring processes. E-verify is not mandated in Proposition 202, stop illegal hiring, it is a choice. As is the current I-9 processes. Legal businesses here in Arizona that use legal methods of hiring people, aren't breaking the law, aren't going to be prosecuted for employer sanctions. However, I think we're missing the more important piece of this conversation. All of those unscrupulous businesses out there, that are completely breaking the law, they care not at all about the law, and Proposition 200 aggressively goes after those guys. We're talking about the black-market cash economy, we're talking about the folks engaged in identity theft rings, etc. We need to aggressively go after that sort of behavior, and it is not okay, and Proposition 202 makes sure that it is not okay.

Don Goldwater
>> Stolen identity, the way they process stolen identity is that -- in order for -- if I am an illegal alien coming into the country, and this person is handing me an identity, I-9, social security, driver's license to get a job, I have to know that that person doesn't have the authority to give me that identity before it is stolen. This lies in the face of 1324-c. When you sit down and talk about people who are responsible for employing illegal aliens, this initiative over here says the head of the business must have prior knowledge before you can classify that business or attack that business for hiring an illegal alien. 1324-c doesn't say this person must know or that person must know. The federal government's law says anyone.

Ted Simons
>> Again, when we started off, the idea was that this would be more enforceable and more fair as far as an employers sanctions law is concerned --

Jessica Pacheco
>> Why doesn't the current law apply to all businesses? We need a law that applies to everyone. Proposition 202, stop illegal hiring, applies to everyone.

Don Goldwater
>> No it doesn't.

Ted Simons
>> Hold on a second. Critics will say corporate chains and restaurants and hotels and these sorts of things, corporations, that it doesn't apply. They are exempt, are they wrong?

Jessica Pacheco
>> Completely wrong.

Don Goldwater
>> What she is talking about, the only thing the state has the authority to do, penalty phase, federal government and law, they can only go after the licenses that the state hires. If you have a business out there that does not have a business license, the state cannot impose fines on that person because only the federal government can do that. Which is -- one of the things into this thing, they talk on the 100 word description, this initiative will collect fines and penalties from people who violated this initiative, not this portion, but the initiative in total. This is exactly why this current law has been upheld in the ninth circuit court of appeals.

Jessica Pacheco
>> Don and I have this conversation frequently all over the state. You don't understand the law, Don, or you are purposely trying to mislead the folks listening to our frequent debates, because there is a fine section in Proposition 202. But it is associated with the black-market cash economy. It is associated with those businesses that aren't paying taxes and fines are levied there. That is completely constitutional and legal and appropriate.

Don Goldwater
>> What do I misunderstand when your initiative says fines collected as a result of this initiative will be distributed to schools and hospitals to help deal with the financial burden placed on Arizona based on illegal immigration. Your words, not mine.

Don Goldwater
>> Let's talk about that. Their initiative talks about this issue on the black-market cash economy going after people who hire more than four people. If you look at the national studies, the average person that gets picked up on the sidewalk or home depot is two. This is a great smoke screen they will go after the cash economy, it doesn't happen. Additionally --

Don Goldwater
>> For two, not four.

Ted Simons
>>> We wrap up with the last measure on the ballot, Proposition 30. If approved, it would increase a state lawmaker's pay from $24,000 a year to $30,000. An argument for the measure states that it will help build a true citizen legislature. An argument against says that lawmakers can't do their job properly. That's it for our show. Thank you for joining us and we hope you've learned a lot about the Propositions. I’m Ted Simons.